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We're Shutting Down and I'm Scared

startupsanonymous.com

191–200 of 205 posts

Re: We're Shutting Down and I'm Scared

#191
post #18

Been there. * If your payables and debts are all in the company's name, nobody is coming for your house. The likelihood that your business was going to die before you could pay all your debts was priced into your contracts. If you have employees, pay them and get them off your books first; employee wages are, depending on the state you're in, the one likely exception to that rule. * If they were in your name, well, t…

(1) work for someone else, (2) start company, (3) run company into ground, (4) goto 1.

So true, it hurts.

Re: We're Shutting Down and I'm Scared

#192
post #99

Earlier quoted context omitted.

The dumbest thing I've ever done in my career was to start a "founders don't take salary" company after earning a windfall from the sale of the last company I'd been at. Most companies fail. That company was no exception. The personal cost was spectacular. Most HN'ers seem to be in their mid-20s. Something you'll learn when you cross 30 is that time is more valuable than money. You'll never get the years you spend ch…

I'm trying to understand the context and limits of your advice, in light of the chicken-and-egg problem of getting people to invest in or buy your product before proving it out, which usually requires building something to show it's possible, which usually requires quitting your previous employer so they don't own it. Are you suggesting that forgoing salary shouldn't be a substitute for thinking about your revenue mo…

The only time a founder should forego salary is before anyone else has invested a dime. And in that case, the paperwork should specify that you are earning a salary but it is deferred, ie you are lending that money back to the company.

Once a real investor enters the picture, if you can't pay yourself even a reduced salary (say 60% market rate), you're not raising enough money and/or you have a sucky investor. Add to the 60% salary with some of that back pay you are owed, or convert the back pay into equity at a favorable (to you) valuation.

Re: We're Shutting Down and I'm Scared

#193
post #89
post #18

Been there. * If your payables and debts are all in the company's name, nobody is coming for your house. The likelihood that your business was going to die before you could pay all your debts was priced into your contracts. If you have employees, pay them and get them off your books first; employee wages are, depending on the state you're in, the one likely exception to that rule. * If they were in your name, well, t…

"Shitty credit is not that big of a deal." You realize that your credit record effects more than just your ability to get credit and other financial services right? Insurance companies will sometimes deny coverage based on information in your credit record. ie: health insurance. [0] http://www.consumer.ftc.gov/articles/0152-how-credit-scores-...

agreed, this has changed drastically in the last 25 years. Sucky credit has gone from a minor annoyance to a pretty serious life issue. If you are letting your credit suffer for your company, you are doing it wrong. That sort of risk is precisely what investors are for. Working for a reduced salary, with pretty much zero job assurance, and bad or nonexistent bennies to begin with, and working nights and weekends, letting your personal and social life suffer, is punishment enough. If you get pressure to put more personal financial skin in the game, play good/bad cop with your spouse or life partner (ie use him/her as an ironclad limit on how far you can go towards financial armageddon)

Re: We're Shutting Down and I'm Scared

#194

Earlier quoted context omitted.

Protip: many landlords in hot property markets like Vancouver are speculators who are using your rent to pay their mortgage. Offer to pay a year's worth of rent up front in return for a discount (I'd ask for 3% - more than you can get from a risk-free investment but less than the landlord's mortgage interest rate). Obviously this only applies if you have sufficient liquidity that paying $30,000+ upfront isn't going t…

Alas, the BC Residential Tenancy Act makes it illegal to have a deposit larger than one month's rent. Not that anyone is going to stop you -- but if you pay 12 months of rent in advance, you can legally demand the next day to have 11 of those months of rent returned to you. Unfortunately the law is very clear that you can't sign away your right to only pay one month of deposit -- even if you want to.

It's this sort of nonsense that makes me lean libertarian

Re: We're Shutting Down and I'm Scared

#195

Earlier quoted context omitted.

I'm trying to understand the context and limits of your advice, in light of the chicken-and-egg problem of getting people to invest in or buy your product before proving it out, which usually requires building something to show it's possible, which usually requires quitting your previous employer so they don't own it. Are you suggesting that forgoing salary shouldn't be a substitute for thinking about your revenue mo…

The only time a founder should forego salary is before anyone else has invested a dime. And in that case, the paperwork should specify that you are earning a salary but it is deferred, ie you are lending that money back to the company. Once a real investor enters the picture, if you can't pay yourself even a reduced salary (say 60% market rate), you're not raising enough money and/or you have a sucky investor. Add to…

I haven't seen anyone negotiate for unpaid back salary in a situation like that. Have you?

Re: We're Shutting Down and I'm Scared

#196

ummm... Didn't we invented a marvelous escape hatch called "aqui-hires" exactly for this situations? If you have even moderately connected investors, you should be able to get aqui-hired in a week or two, very likely sipping pina colada on a Caribbean beach to stretch out before you start the new job with giant bonus vesting schedule that beats any of your colleges. Plus you get to update your Linked-In profiles with…

Easier said than done.

Re: We're Shutting Down and I'm Scared

#197

Earlier quoted context omitted.

Alas, the BC Residential Tenancy Act makes it illegal to have a deposit larger than one month's rent. Not that anyone is going to stop you -- but if you pay 12 months of rent in advance, you can legally demand the next day to have 11 of those months of rent returned to you. Unfortunately the law is very clear that you can't sign away your right to only pay one month of deposit -- even if you want to.

It's this sort of nonsense that makes me lean libertarian

Yes, this seems to me to be a rather absurd overstretch of the "consumer protection" purpose.

Re: We're Shutting Down and I'm Scared

#199
post #99
post #34

Earlier quoted context omitted.

In addition to Thomas being right about employee wages being able to "pierce the veil" in many states, they're the people most at risk in this situation, so you owe it to them to make sure they're taken care of. It's the one circumstance where I would backstop a company problem with personal funds. (If your company was also behind on e.g. rent or hosting, on the other hand, that risk was priced into contractual terms…

The dumbest thing I've ever done in my career was to start a "founders don't take salary" company after earning a windfall from the sale of the last company I'd been at. Most companies fail. That company was no exception. The personal cost was spectacular. Most HN'ers seem to be in their mid-20s. Something you'll learn when you cross 30 is that time is more valuable than money. You'll never get the years you spend ch…

Indeed.

If you ever watch Shark Tank (which has become remarkably redundant), you'll note that each shark has a certain style (no doubt born of his/her own experience/personality).

Cuban is always harping about sacrifice, breathing the dream, not taking a salary, etc. The story goes that if you want it bad enough, you'll make the sacrifices. This has become a common belief that is propagated about entrepreneurship.

I've come to believe that it's absolute nonsense. Engaging in self-destructive behavior does not have to be a core tenant of entrepreneurship nor some proof of passion or dedication. And, at what point is the entrepreneur just a slave to the investor? Some will say, "well, the investor is risking her money". Sure, but she is only doing so because, presumably, she can afford it. In other words, it is a discretionary "luxury" for the investor to invest, whereas it can be a subsistence-level sacrifice for the entrepreneur to go without a salary.

Whether it's a failing bootstrapped company or funded venture wherein investors require an unreasonably small salary or none at all, this is not good. And, for people who go the entrepreneurship route for "freedom", the effect can be the opposite. Not having an income introduces stresses and risks that represent anything but freedom.

Re: We're Shutting Down and I'm Scared

#200
post #153

Earlier quoted context omitted.

I'm sorry I might have misunderstood you. But if you have money in your personal bank and none in the corporate bank, why would you pay yourself (and be taxed on it) rather than just use the money (your money) to cover the living expenses?

That's what I'm trying to understand from tptacek's post. Some hypotheses that come to mind: 1.) Putting money into the corporate bank and then taking it out as a nominal salary keeps you really honest with yourself. You can't say "There's money in my bank account, there's not much need for urgency", instead you see the corporate bank account dribbling dry just as if it were someone else you were paying. 2.) It reduc…

It's (1). It does more than keep you honest with yourself; it also protects the value of your time.
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